January 12, 2012 | In: Technology

Kodak (EK) Reverse Split Soon!

I have a friend who works with Kodak, and he tells me that the only thing that is keeping Kodak alive is the service/consultancy business. The product business is very bad and is making Kodak lose a lot of money. Obviously, this is not classified information as the market is not easy on EK (Kodak’s stock, the E stands for Eastman, the last name of Kodak’s founder, in case you want to know), which is now literally a penny stocks. I have classified EK as one of the most hated stocks in the American markets.

Now, since EK is now trading at below $1 for over a month now (it is currently trading at $0.70, so $700 will get you a thousand EK shares – if you want them!), it is at risk of getting booted out of the NYSE, because if a stock trades below $1 for more than 30 consecutive business days, it will receive a warning from the NYSE to rectify the situation within 6 months, or it will get delisted. I’m sure that it’s only a matter of days before Kodak receives this warning. Now Kodak has 3 options:

  • Artificially increase the price of the stock by buying its shares back
  • Do a 1:10 reverse split (meaning that 1 EK stock after the reverse split will be worth 10 EK stocks before the reverse split)
  • Announce bankruptcy

Judging by the financial situation of Kodak (they can’t buy back the stock) and the stubbornness of Antonio M. Perez, Kodak’s CEO (a man that would never admit defeat, even though it’s crystal clear – so there’s no way Kodak will announce bankruptcy), I think they will go with the second option (they might even go with with a 1:100 reverse split, which will make their stock worth $70)

So what will happen to the stock when they do a 1:10 reverse split (and they will):

  • The stock price will be $7.
  • The stock daily fluctuation will not longer be susceptible to high manipulation. Everyday EK goes up or down by at least 10%.
  • The number of shares will be about 27 million shares.

Of course, the reverse split will not stop the slide, and I expect Kodak will need another reverse split by the end of the year as well.

It’s really sad to see companies, that were icons at one point in time, becoming this pathetic because of horrible management. I remember my mom’s first camera was Kodak. I still remember how it looks like.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

1 Response to Kodak (EK) Reverse Split Soon!


Will Kodak Go Bankrupt? « Fadi El-Eter

January 13th, 2012 at 3:48 pm

[…] my post yesterday on Kodak’s reverse split, I made a huge research on Kodak as a company to see if it the third option in my post (Kodak to […]

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